Hank 瀚克

Module 14.2: Demand and Supply

LOS 14.b: Compare substitution and income effects.

When the price of Good X decreases, there is a substitution effect（替代效應）that shifts consumption towards more of Good X.

替代效應:在其他條件不變下，某商品價格下降，會傾向購買更多此商品。

舉例:假設，在其他條件不變下，對你來說無糖綠茶&美式咖啡互為替代品（它們現在價格相同，喝一口綠茶和咖啡的解渴程度和爽快程度差不多。你平常消費兩種飲料有一個固定的比例。）

現在美式咖啡打折，對你來說，美式咖啡性價比變得高於無糖綠茶，因此在預算一定的情況下，你會選擇消費更多的美式咖啡，減少無糖綠茶的消費，出現了以美式咖啡替代無糖綠茶的結果。

Because the total expenditure on the consumer's original bundle of goods falls when the price of Good X falls, there is an income effect（收入效應）.

收入效應:在其胎條件不變下，當某種商品價格下降，在薪水不變的情況下，你能買到的該產品變多，可以想像成你的實際收入增加，即你的薪水購買力增加了。

The income effect can be toward more or less consumption of Good X.

In conclusion, the “substitution effect” always acts to increase the consumption of a good that has fallen the price, while the “income effect” can either increase or decrease consumption of a good that has fallen in price.

Three possible outcomes of. A decrease in the price of Good X:

The substitution effect is positive, and the income effect is positive👉X will increase.

The substitution effect is positive, and the income effect is negative but smaller than income effect 👉 X will increase.

The substitution effect is positive, and the income effect is negative and larger than income effect 👉 X will decrease.

LOS 14.c: Distinguish between normal goods and inferior goods.

We defined normal goods and inferior goods in terms of their income elasticity of demand.

Normal good is one for which the income effect is positive.

Inferior good is one for which the income effect is negative.

A specific good may be an inferior good for some ranges of income and a normal good for other ranges of income.

一個商品可能在不同收入水平下，可能是"正常品"，也可能是"次等品"。

例如:對一個非常窮困的人，收入的微幅上升，可能導致他購買更多的生活必需品，像是能夠溫飽的米飯，此時米飯是正常品。當收入提升到更高的水平，米飯可能變成次級品，減少消費，會偏好買更多的高檔牛排之類的。

Giffen good is an inferior good for which the negative income effect outweighs the positive substitution effect when price falls.

A Giffen good is theoretical and would have an upward-sloping demand curve.

Veblen good is one for which a higher price makes the good more desirable.

The consumer gets utility from being seen to consume a good that has high status, and that a higher price for the good conveys more status and increases its utility.

It has a positively sloped demand curve for some individuals over some range of prices.

It does violate the theory of consumer choice（簡單理解為一般“價格越高，需求量越低的需求法則”）.

It is not a inferior good, so both the substitution and income effects of a price increase are to decrease consumption of the good.

（精品OUTLETS或名牌打折時，是會引起搶購的現象。從名詞Veblen good也可知道他與吉芬商品不一樣，不是次級品）